Forex market

How is the Forex market suitable for beginners?

Forex, also known as foreign exchange, is the buying and selling of international currency as a continuous trade in an independent environment. Unlike the stock market, the foreign exchange industry is not regulated by any central authority, which makes is easily accessible to new traders. In the past few decades, investments in foreign exchange have seen a considerable increase in the number of traders and the amount invested. On average, the foreign exchange market amounts to more than 5 trillion US dollars in a day while the stock market floats at roughly 200 million US dollars in a day.

market amounts

The whole idea of trading in currency originated after the implementation of the Bretton Woods system by the International Monetary Fund in 1994, which established the US dollar as the primary currency for all international trades. This gave birth to forex, the trading of two currencies by private parties. As of now, forex has become a force to be reckoned with, and it attracts a higher number of new traders than the traditional stock market.  Since any central authority does not control forex, entry and exit become very easy.

Foreign exchange proves to be more comfortable for a new investor as it does not function using a lot of variables. The stock market has millions of listed companies to choose from, and that becomes a tedious job. The forex market is limited to the number of currencies present, and people mostly trade in the high currencies which narrows down the spectrum even further. Given the endless list of shares, the stock market requires you to be on the spot with your research and knowledge. Missing the business news on any beautiful day might cost you a fortune. The stock market is a highly sophisticated industry; minute changes in this industry can cause the market to crash. The forex, being an independent trading platform, requires less effort as compared to stock trading. The international currencies fluctuate daily, but it is relatively easy to understand the pattern and come up with multiple algorithms(must watch) to excel in this industry.


Since forex is an open platform, the competition between the brokers is very high, and this reduces the charges of trading to a relatively lower point. But this same open platform gives spine to frauds and schemers, and it becomes comparatively easy to cheat new traders and flee with their money. The leverage in the forex market is another double-edged sword which can cause collateral damage. The leverage ratios for trading in currencies stand at an average of 50:1 while the same for the stock markets 2:1. Given this high leverage, it becomes easy to obtain large profits in a smaller amount of time, but the risk of losing it all escalates at a quicker pace.